Chapter 3: Problems 3, 4, and 7
3.)
-Price Elasticity= (dq/dp * p/q)
-Price Elasticity = (1800-1500)/ (1.75-2.25) *(2.25+1.75)/1500+1800)
-Price Elasticity = 300/-0.5 * 4/3300
Price Elasticity = -0.72
From my calculations, the price elasticity of demand is -0.72.
The consumption varies from 1500/day to 1800/day and the range is 300/day.
4.)
a. Compute the price elasticity of demand for subway rides.
Price Elasticity = 0.3/2 = 0.15
b.) If the transit authority reduces the fare back to 50 cents, what impact would you expect on the ridership? Why?
If the transit authority reduces the fare back to 50 cents, there will be an increase in ridership of 30%.
7.)
4*(-1.5) = - 6%
0.6*11 = 6.6%
Chapter 4: Problems 5, 6, and 7
5.)
a. Determine the point price elasticity of demand for tweetie sweeties.
-2.15
b. Determine the advertising elasticity of demand
1.05
c. What interpretation would you give to the exponent of N?
The interpretation that I would give the exponent N is the following: There is an increase in 1% in population under 12 years old will increase the demand of the general cereal’s product by 3.70%.
6.)
a. Determine the price elasticity of demand.
=-2.174
b. Determine the income elasticity of demand.
= 0.461
c. Determine the cross price elasticity of demand
=1.909
d. How would you characterize the demand for haddock?
-2.175 = demand is elasticity as it is more than 1.
0.461=if income went up 1% its effect is minimum.
1.909=if price elasticity is 1.909 it will effect haddock.
e. Suppose disposable income is expected to increase by 5 percent next year. Assuming all other factors remain constant, forecast the percentage change in the quantity of haddock demanded next year.
Increase in income=5%
=5x0.461
=2.305% that is change in quantity demand of haddock.
7.)
Chapter 5: Problems 1, 5, 6, and 9
1.
a. If Y = $11,000, Z = $1,200 and P =$20,000 what value would you predict for S?
S = k(YZ)/P...